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After looking into the issue of Tesla’s right-to-sell in Texas, talking with other owners, and visiting the Capitol for our Austin Capitol Day, those involved have some thoughts to share. The information below was gathered from a few sources so wanted to thank those involved. I also wanted to thank everyone who has been working on this as owners and fans of Tesla including John, Dianne and Doug, Stephen, David, Bill and many others. I’m sure I am leaving someone out and there are many others who we don’t know about I’m sure who worked on this. Our Capitol Day was a very small part of this overall push and just the start of this effort. I‘m sure others, including Tesla, have been working behind the scenes for years to make buying a Tesla in Texas a more normal and easy process.

Issue:
Under the current Texas Occupations Code (TEX OC. CODE ANN. § 2301.476), Tesla is unable to sell its vehicles directly to the public because it has no franchised dealer relationships in Texas (or anywhere else in the United States or world for that matter). This regulation not only affects Sales, but also Service of Tesla vehicles for existing customers.

How does this affect you?
In short – it complicates everything Tesla does in Texas.

Here are some examples:

Sales: Tesla currently operate two galleries in Austin and Houston. In an effort to comply with the current laws, employees at these galleries are prevented from discussing pricing and the reservation process. This includes any discussion on financing, leasing, or purchasing options. Also, galleries cannot offer test drives. All Texas interactive kiosks are also amended to remove pricing. The fact that Tesla can't legally discuss the price of its American made product is hard to understand, and does not fit with the small government and free-enterprise principals that Texas embodies. Lastly, Tesla is unable to refer the customer to a Tesla store out of state. This puts Tesla at a serious disadvantage to other car sales establishments in just about every obvious way and inhibits Tesla’s ability to reduce perceptions of limitations of Electric Vehicles through any sort of comprehensive education on the vehicle or the technology.

Delivery: Cars are shipped to Texas via a third-party transport company. Tesla employees cannot accompany the vehicle or provide information or guidance on operations until 48 hours after the customer takes delivery. In an attempt to accommodate customers, owners are invited to watch online tutorials on the various vehicle functions – or they can call the Tesla Service number and speak to someone at Tesla Motors, Inc. in Fremont, CA regarding their questions, but this limitation severely impedes customers' use of their automobile in a way no other brand suffers.

Registration: Normally, registration for the vehicle is included in the final paperwork submitted to take ownership of the vehicle. Tesla does this for its customers in other states. In Texas, customers must first take ownership of their vehicle and then register the vehicle themselves at the Texas DPS. At this time, they pay Texas Registration and Titling Fees – but most importantly, Texas sales tax. Because this process occurs after the sales transaction, many Tesla customers have reported their inability to fold the sales tax cost into the total cost of the vehicle for financing purposes. In some cases, customers have to pay more than $5,000 out of pocket that they otherwise could have paid for over years of financing. This isn’t fair to Texas Tesla Customers!

Service: Customers who are in need of warranty service must call the Tesla Service number and speak to someone at Tesla Motors, Inc. in Fremont, CA, which is a licensed dealership location in California. There a Tesla Service employee in Fremont will determine if warranty repair work is needed/warranted. If so, they will send authorization to sub-contract the work to a local subsidiary, Tesla Motors TX. The local repair centers – currently in Austin and Houston – cannot advertise that they do warranty repairs nor can they discuss any other warranty repairs with the customer, and can only fix the problem that Tesla Motors, Inc. authorized for warranty repair service. Tesla Motors TX then bills Texas Motors, Inc. for the work and the work is covered by warranty to the customer through Tesla Motors, Inc. If customers have additional warranty concerns, Tesla Motors TX cannot discuss them with the customer – the customer would need to call Tesla Motors, Inc. back and go through the process again.

Often, this process requires Tesla to use out of state labor as well. Thus Texas is losing money, not only in terms of payroll tax but in additional spending income by those service technicians.

What is Tesla trying to do about it?
In short - Tesla wants to provide the same level of customer service to Texans that it provides to customers in Florida, Minnesota, Missouri, California, North Carolina, Oregon, Massachusetts, New York, and many other states, but can't because of these protectionist rules.

Prior to the filing deadline, it appears Tesla Motors reached out to Sen. Craig Estes (R-Wichita Falls) and Rep. Eddie Rodriguez (D-Austin) who agreed to file bills on their behalf. These bills would permit U.S.-based manufacturers of all electric- or all battery-powered vehicles to sell directly to Texas consumers. This approach does not harm any existing franchise and addresses dealer concerns that foreign manufacturers of conventional automobiles may by-pass existing franchise laws and regulations.

As current and potential future owners, we are very fortunate to have recently been notified that both bills will receive hearings in their assigned committees:

In the Senate, SB 1659 was referred to the Transportation and Homeland Security Committee. A hearing has been scheduled for Wednesday, April 3rd, beginning at 8am in Hearing Room E1.016. Diarmuid O’Connell, Tesla Motors VP of Business and Corporate Development will testify as will a representative from TADA and TXDCP.

In the House, HB 3351¸was referred to the Business and Industry Committee. A hearing date has yet to be scheduled, but is likely to occur within the next 2-3 weeks.

What can we as supporters do?
1) Take a look at the Senate and House Committee websites – if you or your friends are represented by a State Representative or Senator on this committee, feel free to contact their Capitol office and register your support:

Some examples:
“I’m calling to register my support for SB 1659/HB 3351 – I want what’s fair! Texas dealers are preventing my car from being repaired efficiently and forcing money out of state.” [see point about this in explanation of Tesla Service in Texas]

“I’m calling to register my support for SB 1659/HB 3351 – I believe in the free market!”

“I’m calling to register my support for SB 1659/HB 3351 – I support new business coming to Texas!”

2) Attend a hearing at the State Capitol (BRING YOUR TESLA!) and register your support and/or seek an opportunity to testify in favor of the bill
a. In the Senate, you must fill out a witness affirmation card BEFORE the meeting begins in order for it to be counted.

b. In the House, you use an iPad attached to the wall that can be found throughout the Capitol. With the iPad registration, people can register any time before
the hearing, so again, they can stop by in the morning, fill out the info on the iPad, and leave without ever stepping foot in the committee. Here’s some additional information on those stations. You must register your support BEFORE the hearing begins.

c. Unless you wish to testify, you can fill out the card and leave. Those wish to speak will have to wait until the bill comes up for discussion in accordance with
the hearing schedule

The Texas Capitol opens at 7am.

For those interested in coming down, Parking is available in the Capitol Visitors Parking Garage at 1201 San Jacinto located between Trinity and San Jacinto Streets at 12th and 13th streets. Alas, there does not appear to be an EV charging at the facility. This is where we hosted our mini Austin Capitol Day.

Additional Facts about Tesla:

-Tesla operates 2 Galleries in the State of Texas (Austin and Houston). Tesla also operates 2 Service Centers (with limited capability) in those locations with an additional service center in Dallas.

- There are over 400 Tesla Roadster and Model S owners in Texas currently with more arriving every week!

I just talked to my cousin who is a lobbiest in a completely different area and she said:

1) You can watch the hearings live. This Senate hearing should be here: Texas State Senate RealMedia Streaming Broadcasts
2) You can see who registered support before and against on the Capital page: TLO
3) Additional speakers might be possible, potentially limited to three minutes (unless you get extended due to Q&A). In her experience, Senators tend to like hearing from 'real people' but cautioned against reading your statement. Just be honest and speak to your issues.
4) She said Tesla is going to have an uphill fight because the Dealer lobby is one of the strongest in Texas. Further, a bill takes 2/3 vote to get out of the Senate IF it makes it out of committee, so a lot of convincing needs to happen between now and then if it emerges. If you want to make a difference as an owner, this is the time. Please contact your local reps and ask for their support. If you don't know who they are, you can find out here: Who Represents Me--Home

Okay, I called both my Senator and Representative this morning. Other than showing up at the hearing on Wednesday morning, calling your own representatives is probably the most effective thing you can do. I also sent tweets to mine which I include here in case you want a template. I think to tally their own folks they want to know your ZIP code which is why I included mine, but if you don't feel comfortable with that, whatever you can do is fine:

For your Rep:
@JimMurphy133 As a constituent in 77079, I’d really love your support on HB 3351. The way Texas treats Tesla is unfair and anti-free market.

For your Senator:
@JoanHuffman As a constituent in 77079, I’d really love your support on SB 1659. The way Texas treats Tesla is unfair and anti-free market.

You could also send out a thanks to the two members that sponsored the legislation:

FB: Thanks so much for HB 3351 supporting innovation in the electric vehicle market! I own a Tesla Model S and it is an amazing vehicle, but the roadblocks the state has setup for new manufacturers like Tesla seem both unfair and anti-free market.

To make it easier, here are the names and contact information for all the members of the TEXAS SENATE transportation committee who are meeting this Wednesday April 3 to discuss SB 1659 (which would permit US manufacturers of electric cars to sell direct):

I'm going to be sending messages to all of them... Rodney Ellis is from Houston and I have a connection so I'm going to try to get a personal message to him directly. Anyone else know people on this list?

A good approach to take on this issue, in my opinion, is, "What if Apple weren't able to sell their products directly to their customers? Then Apple wouldn't have been able to innovate with how they sell their product (Apple Has twice the sales per square foot of any other U.S. retailer) and how they support their product (the Genius Bar consistently gets rave reviews). Tesla wants to do the same thing with cars and the State of Texas shouldn't stand in its way."

A good approach to take on this issue, in my opinion, is, "What if Apple weren't able to sell their products directly to their customers? Then Apple wouldn't have been able to innovate with how they sell their product (Apple Has twice the sales per square foot of any other U.S. retailer) and how they support their product (the Genius Bar consistently gets rave reviews). Tesla wants to do the same thing with cars and the State of Texas shouldn't stand in its way."

Click to expand...

That's a great example. Babylonfive came up with this but another idea is to substitute Dell for Apple since Dell is an Austin based company and understood more by the politicians here.

There is a legitimate role for regulation: historically, car OEMs have been able to abuse their dealers by, for example, forcing them to purchase and hold inventory they don't want. Franchised dealers also spend a lot of their own $$ advertising the brand; having made that investment, there is a reasonable reason to protect that investment from being captured by OEM-affiliated dealers.

Now, none of those arguments hold in the case of Tesla. There are no incumbent dealers who have made any investments, so there's no one who is harmed. This logic is what the judge in Massachusetts used in throwing out the dealers' suit against Tesla: they weren't harmed, so they don't have standing to sue.

@jimbakker666: if you're outraged by this law in Texas, are you aware that there is one just as bad in Colorado? It was enacted after Tesla opened its Denver store and didn't apply retroactively, but Tesla won't be able to open a second one in, say, Boulder. As I understand it, the law was passed in direct reaction to Tesla's entry, sort of a "whoa, we didn't realize there was that ​loophole; let's slam the door shut before any more horses leave the barn!".

To make it easier, here are the names and contact information for all the members of the TEXAS SENATE transportation committee who are meeting this Wednesday April 3 to discuss SB 1659 (which would permit US manufacturers of electric cars to sell direct):

I'm going to be sending messages to all of them... Rodney Ellis is from Houston and I have a connection so I'm going to try to get a personal message to him directly. Anyone else know people on this list?

I just got off the phone with Senator Larry Taylor's office. I gave them all of my information and my 2 cents about Tesla not having incumbent dealerships from which to cannibalize business and also the Apple argument. I basically said that the law was created to protect incumbent dealerships from manufacturers coming in possibly harming their business however, Tesla has never had any dealerships so this should not apply to them. At the end I said that I hope what I have said resonates with you and he seemed to agree that it made sense. I don't know what else to do from here.

I just got off the phone with Senator Larry Taylor's office. I gave them all of my information and my 2 cents about Tesla not having incumbent dealerships from which to cannibalize business and also the Apple argument. I basically said that the law was created to protect incumbent dealerships from manufacturers coming in possibly harming their business however, Tesla has never had any dealerships so this should not apply to them. At the end I said that I hope what I have said resonates with you and he seemed to agree that it made sense. I don't know what else to do from here.

The Senate Transportation Committee meets in Room E1.016 in the Capitol Extension. A map of the Capitol Extension is attached. To get to the extension, take the elevators on the north side of the 1st floor rotunda down to level E1.

Witness Registration Cards

Senate Transportation will open the doors to the committee room at 7:40 am. Witness registration cards will be located on the table as you walk in or you can ask a clerk at the dais. You must fill in all required information and sign the card or it will not be accepted.

Please fill out the witness registration card information as follows:

Bill number: SB 1659

Position: Check the box "for"

Do you wish to orally testify? Check "no, registering position only"

Do you wish to submit written testimony? Check "no"

Name: First and Last

Representing: If representing a business, put business name here; if representing yourself leave blank

Title: If representing a business list your title

Email: personal or business email

Street/City/State/Zip: your residential address

Phone: Your phone number

Signature and date: Make sure to sign or the card is invalid

Give the completed card to the clerk at the dais. Witness cards will be accepted from 7:40 am until the bill is heard. Since we do not know when the bill will be considered by the committee please arrive between 7:40 and 8:00 am to fill out your card.

Parking

The Capitol Visitors Parking Garage at 1201 San Jacinto located between Trinity and San Jacinto Streets at 12th and 13th streets. Parking is free for the first two hours and $1.00 for each half hour thereafter.

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